Streaming music is slowly cannibalizing digital download sales

By on July 20, 2013, 3:45 PM
apple, spotify, music, rhapsody, streaming, digital downloads

The music industry was flipped on its end more than a decade ago as the advent of digital music led to huge sales declines. Sales appeared to stabilize around 2011 and 2012 but then along came another disruptive force - streaming music.

Recent figures released by Billboard and Nielsen reveal a 4.6 percent decline in overall album and track sales during the first half of 2013. Broken down further, we find that sales of digital downloads dropped 2.3 percent while sales of physical CDs fell by 14 percent. The total number of mid-year streams, however, increased by 24 percent.

None of this is good news for the current top music retailer, Apple. But unlike the transition from CD to digital which saw a spike in music piracy (and a drop in sales), streaming music is still a viable revenue source for artists and record labels.

Services like Rhapsody, Spotify and Pandora all offer access to a huge catalog of music free of charge in exchange for ad placement or other restrictions. Alternately, most services offer a paid subscription model that will do away with restrictions and even allow for streaming via mobile devices. It may not be as lucrative as the old days of selling CDs and cassettes or the $0.99 downloads but it’s better than nothing.

Streaming appears to be the method of choice moving forward although Apple’s upcoming iTunes Radio will attempt to recharge the digital download industry while at the same time collecting revenue as a streaming provider.




User Comments: 31

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tipstir tipstir, TS Ambassador, said:

Audio Stream or not to stream. This what they wanted everyone to do now. Sirius XM service is not cheap I have that for 2 years now!

This will be the last year of that service. I use the ipod (got it for a gift) in my SUV is equipment for that device with the Media Center/Navi. Can also speak to the SUV and she can change the type of music I want.

Stream and add music seems easier. CD are cheap also today. Youtube has all sorts of Music Videos from Artist and also Amazon MP3, and the iTunes. Android way is different though.

Experimentongod said:

Slowly cannibalizing? I thought it already had killed them, interesting.

negroplasty negroplasty said:

Funny, since I've subbed to a streaming music service I've spent 90% more money on music... I know a lot of people in the same boat. Greedy bastards in the music industry, honestly.

windmill007 said:

People still buy a single song for over $1 when they can have 20 million for $9.99???

windmill007 said:

They need to lower the per song cost to a more reasonable .10 to .20 per song. The time of ripping people off is over. That's why so many choose Spotify and similar services.

Guest said:

Agreed.

They just decided that a song was worth a dollar. We didn't agree to that price.

Guest said:

@windmill007: You don't own it, you only rent it. The difference is quite big.

3 people like this | avoidz avoidz said:

I've had streaming music for decades: radio.

JC713 JC713 said:

No surprise. Spotify is just too OP (overpowered) lol.

Guest said:

I just download everything for free :)

cliffordcooley cliffordcooley, TechSpot Paladin, said:

I just download everything for free
You do realize that is what people say, when they pocket store items and walk out the door. Just because they can do it doesn't mean it can be justified. And when you download, that is exactly what you are doing.

Guest said:

They can have 20 million for $9.99

haha

200 million for freee

treetops treetops said:

Next thing you know they will be using radio waves

Skidmarksdeluxe Skidmarksdeluxe said:

I just download everything for free
You do realize that is what people say, when they pocket store items and walk out the door. Just because they can do it doesn't mean it can be justified. And when you download, that is exactly what you are doing.

Ignore it. They're just trolling. Do you think they'd have the guts to ID themselves?

RmandsDC RmandsDC said:

Personally, I've never liked digital music distribution, I prefer the real deal - CDs, it is complete, it is art. However, I use Spotify a lot, but it just seems too easy to listen to something, there's no longer the feeling of accomplishment, you never paid for it, so it is easier for the ears, music plays more in the background, as opposed to listening to it. If only I had the money to buy ALL of the CDs...

RmandsDC RmandsDC said:

They need to lower the per song cost to a more reasonable .10 to .20 per song. The time of ripping people off is over. That's why so many choose Spotify and similar services.

Well think about it from artist's perspective, they do all that musical work only to receive some pennys, therefore, the most of the dollar you pay for the song, goes to the label, so in my opinion, reducing the price of a song to 0.2$ would be just robbery, leaving artists bums. Well, it is not actually the record that makes all the money to artists, I am speaking more for the minor labels, that don't have contracts for millions, but artists at the major ones are probably more than fine.

yukka, TechSpot Paladin, said:

I use spotify premium. I get it half price with a discount via national union of students in uk (NUS). Anyone waffling about downloading for free is better doesn't understand. With spotify you don't have to know about music in advance. You go to a friends with wireless, they like something and you instantly search and play it. You can use it on multiple devices, it carries playlists on your account. For a tenner a month it's worth the money (and for the fiver I pay it's definitely worth it). It's a complete audio solution for my iPhone, MacBook and windows PC at work and at home. Unbeatable. Edonkey and torrents don't cut it. It's just not worth the effort to copy files to multiple devices.

H3llion H3llion, TechSpot Paladin, said:

They need to lower the per song cost to a more reasonable .10 to .20 per song. The time of ripping people off is over. That's why so many choose Spotify and similar services.

Well think about it from artist's perspective, they do all that musical work only to receive some pennys, therefore, the most of the dollar you pay for the song, goes to the label, so in my opinion, reducing the price of a song to 0.2$ would be just robbery, leaving artists bums. Well, it is not actually the record that makes all the money to artists, I am speaking more for the minor labels, that don't have contracts for millions, but artists at the major ones are probably more than fine.

Most artists will make money not through their song sales but venues, festivals and events of that nature. Selling music digitaly is just the small part of it.

wastedkill said:

Oh how bad the artists have it like bruno mars earning $50million a year instead of $70million a year ohh noo they are turing into poor bums... come on people they are earning more than we do in a year stop complaining its not like they wont get by earning a few million a year.

If my salary dropped from $70million to $50million I wouldn't care a bit it just means I would have to save up a few weeks to get my new jet.

soldier1969 soldier1969 said:

..And all this time I thought it was piracy hurting sales mmm. Oh well back to getting my music for free as usual...

Guest said:

Last time I checked Spotify they required a FaceBook ID so that is a no go for me. I use Pandora and di.fm mostly, but if I really wanted another streaming service I would probably just use Googles. I still buy CD's and rip thenm to wav. The wav files sit on a network connected PC that I can access via my main PC, my wifes laptop, the ipad, our phones, and the HTPC if I want to play them via the AV Receiver. That covers it for me. I am never away from my house and wish I had my music to listen to and if I really really really must have a specific song for some obscure reason when I am not at home I can just copy it over to my phone (once a year scenario) in less than a minute. I don't expect I will ever stop buying physical copies of music (CD/vinyl), but I also buy downloaded wav files as well.

Guest said:

"streaming music is still a viable revenue source for artists and record labels."

Where did the author of the article get that from? Here's just one example of what a ripoff streaming services are:

[link]

" Lowery, the singer and songwriter from Camper Van Beethoven and Cracker, posted that article on The Trichordist along with his royalty statement for the 1993 hit "Low." It works out to about four one-thousandths of a penny per play, divided between Lowery and his bandmates."

That's not a viable revenue source in any way. The amounts paid for streams are a pittance, maybe it's no big deal for stuff that's been out for ages and is just pure profit for whoever owns the rights, but any new stuff is going to make pocket change unless it's a massive hit song or album. Of course the artists still make money from concerts and merchandising, if they're popular enough, but this huge drop in revenue from sales to streaming will be a big hit for up and coming acts that don't have Metallica-level money in the bank. Many artists have been making obscene amounts of money over the years, however, so maybe it'll be like that South Park episode, where Lars Ulrich has to wait a couple extra weeks to put a shark tank bar beside his pool. lol.

hitech0101 said:

Finally piracy is not a reason for decline of sales.

cliffordcooley cliffordcooley, TechSpot Paladin, said:

Finally piracy is not a reason for decline of sales.

This is "streaming vs digital downloads" not "piracy vs sales". Piracy is an issue that can be found in both streaming and digital downloads. The same colors can be seen on many different types of fruit. Just as piracy can be found in many different ways of receiving copyright material.

I'm willing to bet this decline in digital downloads is mostly paying consumers moving to streaming. Therefor the ratio between piracy and sales, has likely not changed.

hitech0101 said:

Finally piracy is not a reason for decline of sales.

This is "streaming vs digital downloads" not "piracy vs sales". Piracy is an issue that can be found in both streaming and digital downloads. The same colors can be seen on many different types of fruit. Just as piracy can be found in many different ways of receiving copyright material.

I'm willing to bet this decline in digital downloads is mostly paying consumers moving to streaming. Therefor the ratio between piracy and sales, has likely not changed.

Oh I see. Still hope piracy is left out of sales cause things like DRM create problems only for the legit ones.

dennis777 dennis777 said:

I've had streaming music for decades: radio.

me too. Its free, you dont need data, playlist changes everyday.

Lamont Briggs said:

Look, I think we all know where this is going... There's going to have to be a re-write of all the copyright laws. These industries will have to find new ways of making revenue. It's just the way it goes. No one cries over eight tracks, or cassette tapes, right? Things change, and we adapt as they do. If anything, I promote the companies that push for free content. I appreciate that torch browser has download capabilities built in. When things start changing, it's best to hop on board than to stand against the current when in the end there's only one direction to go.

Guest said:

And music being crap in general ? Surely it must have a tangible effect somehow.

Guest said:

I totally get why it's the method of choice! It's so easy! I stream music all the time, I use Torch Music and it's synced with my phone so I literally have a playlist for every single thing I do. I don't remember how I did anything before I had it!

MilwaukeeMike said:

Agreed.

They just decided that a song was worth a dollar. We didn't agree to that price.

yes we did. The public has bought millions of albums with 12-15 songs for around $12-15 each. If people weren't ok with that price they wouldn't have paid it. At least buying a song one at a time, you don't have to pay for the half-produced filler songs that most albums usually have.

I've had streaming music for decades: radio.

me too. Its free, you dont need data, playlist changes everyday.

Yes, and it's so full of commercials and station promos that's it's not uncommon to flip through 4 or 5 stations before you find one playing a song. But one big advantage of radio is it can play music for you that you don't know about. Unlike your own playlists from iTunes.

SirGCal SirGCal said:

Personally; I am 100% against piracy in any forms and they should stop it absolutely. But also against the DRMs that just mess up lawful members use of using movie/music/games/etc. The Catch22 gotcha.

In the end it comes down to this. The DRMs simply DO NOT WORK at all. Every single one of them is hacked, broken, etc..And most, if not all, within days of the product release. So why even bother any more to be honest? Even the blu-ray 'key' system is so totally broken as to be utterly ridiculous. For players to work they have to publish the keys for every player to recognize the disk. They might as well just remove them entirely as that's as good as handing the hackers the decryption on a plate.

All of that said; I prefer CDs. I can make my own portable MP3's for the phone and have my pure forms for my library. But then again I also buy Blu-Rays for my movies instead of streaming. (Although Hulu/Netflux never have crap worth watching to be honest and I've left both providers recently also...) of which I have a collection larger then most of the population taking up the spare bedroom and then some. I have done Pandora in the past now and again but never very long. I'm just not interested in a service that I just can't pick the exact song now and again and/or rewind through songs, etc. Sometimes I don't want a genera of music but just one band in particular. I can do that with my MP3 collections or with my media directly. That is the difference.

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